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Commercial – Investment Fraud - The Basics

17 January 2020

Adam Haffenden

Everyone is susceptible to investment fraud, and every day criminals invent new ways of taking money from innocent people. These criminals are well organised and often highly intelligent individuals and they will try and mislead you. Investment rarely comes without an element of risk, but that risk can increase exponentially for those unaware of the tactics of fraudsters.

 

Investment Fraud - detect the warning signs

  • Any investment that sounds too good to be true usually is.

  • Be cautious of random phone calls, emails or letters offering one-off investment opportunities.

  • Ensure you carry out due diligence so you can make a well-informed decision. Do not be coerced into an investment.

  • Obtain advice from the Financial Conduct Authority (FCA), or an independent professional financial adviser you trust.

  • Think about the right fraud prevention and detection strategy for your business: it should detail controls and procedures.

  • Understand how money leaves your business, including, methods of payment, who has authority to make those payments, who checks payments are legitimate and always check your bank statements.

  • Secure and protect your property, this includes laptops, smartphones, computers and the business’ intellectual property.

  • Factor in business insurance to cover these items if they’re compromised or stolen. Use and maintain inventories.

 

Types of Investment Fraud

It is fundamentally important to get your money back by enforcing your rights if you have been defrauded by:

  • Unauthorised firms involved in share frauds.

  • Bitcoin and other digital currency fraud.

  • Land investment and banking fraud.

  • Mis-sold investments, such as pensions or bonds, by a bank or other negligent financial advice

  • “Boiler room fraud” refers to an outbound call centre selling questionable investments by telephone.

  • Ponzi or pyramid schemes- these schemes lure investors by paying profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from product sales or other means, and they remain unaware that other investors are the source of funds.

  • Identity theft.

 

You must act fast if you have suffered Investment fraud

If you have suffered at the hands of a fraudster, it is often still possible to recover your money before it is put out of reach but you must act fast. We can freeze bank accounts and other assets in order to recover funds on behalf of our clients. We have a collaborative approach, working closely with specialist bodies, such as forensic accountants, fraud agencies and asset tracers, in order to trace our clients' assets in the UK and abroad. 

 

Potential Remedies for Fraud

In order to pursue a fraudster through the civil courts for the repayment of misappropriated funds, there must be evidence of wrongdoing, for example, misfeasance, misrepresentation, deceit, breach of contract, negligence, breach of fiduciary duty, breach of trust, unlawful means conspiracy or unjust enrichment.

 

We take care in building winning strategies tailored to our clients' specific needs. We have particular expertise in tracing and recovering assets in both the UK and overseas. If you require advice on investment fraud or any other commercial dispute matter, please contact us.

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Adam Haffenden

Senior Associate and Head of Dispute Resolution/Litigation

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